Tag: sales funnels 101

Understanding your sales funnel and being able to draw it out are essential skills you need to have if you want to grow a profitable business.

In this blog post, I want to walk you step-by-step through drawing out your business’ sales funnel. (Download this Sales Funnel Quick Reference Guide for more information about sales funnels).

STEP ONE: LIST EVERYTHING YOU DO

In two separate lists, list all of your marketing efforts and all of your products and services. Don’t worry if the lists aren’t exhaustive; just try to get it all down into the two lists.

For example:

Let’s say that your marketing efforts include online articles and press releases, Twitter, and you participate in your local Chamber of Commerce. You have a website and you also have a landing page that specifically sells an ebook.

And let’s say that your products and services include an ebook, telephone coaching, and seminars.

As you do this step, you might think: “Oh, but sometimes I talk to people on the phone. And how what about the money transaction? Don’t worry, we’ll get to that. You can list it in a third – “where the heck does this go?” list, if you want. Just get the two main lists down first.

STEP TWO: ARRANGE IN ORDER

Now it’s time to arrange your marketing efforts in order. It is very likely that people see you in one marketing channel before finding you in another.

For example:

Your target market might first spot you in a Twitter ReTweet so they follow you on Twitter and then they later check out your website. Or, they might do a search on Google for something, find an article you wrote, and then click to your website. So put your marketing efforts in order.

In the example we’ve been doing, it might look like this. You can see we’ve just grouped everything into three basic groups — the initial marketing at the top, your website homepage and landing page in the middle (since people will probably get to that site THROUGH one of the marketing channels at the top of your funnel) and your products/services at the bottom. Nothing fancy. We’re making some assumptions here (and we can always move stuff around later).

STEP THREE: FILL IN THE BLANKS

As you look at your sales funnel, you’ll realize that there are blanks that haven’t been covered yet (and maybe you added them to a “where the heck does this go?” list in step one). Some examples include:

Add interaction

Add your paygates (the places where the customer pays you)

For example

In the example we’ve been building, let’s imagine that prospective customers contact you (especially from Chamber of Commerce but occasionally through your website) to learn more about your seminars and coaching. After you interact with them a bit, they sign a contract and pay and you deliver the service.

And let’s also imagine that your paygates (which I’ve indicated in green in the example) are as follows: People pay up-front for your ebook and your coaching and they pay after the fact when you deliver a seminar.

In the example we’ve been doing, it might look like this. Again, it’s just a rough diagram and we’ll tweak it as we go.

STEP FOUR: CONNECT THE DOTS

In this step, you start to draw lines from one part of your sales funnel to another.

Not all of your marketing channels will prompt people to move forward in your sales funnel in the same way. Some will drive people to your website, others will get the phone ringing. Some marketing channels will prompt people in more than one way.

And, let’s not forget that sometimes, people will look at one marketing channel and then another before moving forward in your sales funnel, or they will buy one product and then another farther down your sales funnel. So there isn’t just vertical movement down your sales funnel, there is also horizontal movement as well.

For example:

You might find that your article marketing and some of your press releases tend to point people to your landing pages (instead of your website’ s home page) so you draw lines to connect those appropriately. And you might also realize that your Chamber of Commerce activity rarely results in an ebook sale but usually results in coaching and seminar work. So you connect those.

In the example we’ve been doing, it might look like this. You can see that (in our example) the article marketing TENDS to send people directly to a specific landing page in our website and our networking at the Chamber of Commerce TENDS to have people contacting us directly (instead of visiting the website… although some people from the Chamber will visit our website first).

STEP FIVE: GROUP INTO STAGES

At each stage in your sales funnel, the people in that stage have a different mindset. Some barely know you and are skeptical of what you offer. Others feel that they have a pressing problem and are curious if you can help them.

By grouping your different marketing and sales and delivery efforts into stages, you can communicate more effectively with the people in that stage because you know what mindset they have.

In general, I tend to use 5 stages (Audience, Leads, Prospects, Customers, Evangelists) but you might be more comfortable with a different grouping. That’s fine. The important thing is to define the stages and then figure out what mindset your sales funnel contacts have in that stage.

For example:

I’ve used just four stages in this example – Audience, Leads, Prospects, and Customers. Let’s assume that this fictional company doesn’t do very much with its Evangelists.

First we add the Audience stage by grouping together all of the marketing channels that we meet people who have likely never heard of us before.

Then we add the Lead stage by grouping together all of the channels where people might come to us because they’re interested in learning more.

Then we add the Prospect stage by grouping together all of the channels where people might keep digging because they realize that we can solve a problem they have. You’ll note that we made an adjustment with the Landing Page because it does double-duty as both a place where Leads land and a place that convinces Prospects to buy.

Then we add the Customer stage by grouping together all of our deliverables. You’ll notice that the ebook paygate has been moved because as soon as the Propsect clicks the Buy Now button and enters the paygate to pay, they have become customers. And, if they have contacted the business and are ready to receive a contract, they have become customers.

Now it’s your turn! Give it a try for your business. And in the comments below, tell me what you think of this process. I’ve tried to lay it out as simply as possible but I think about this stuff 24/7. Are there aspects of each step that I’m not covering in-depth? Let me know in the comments below and I’ll write a blog post to give more detail.

A sales funnel is a graphical depiction of the interaction you have with your prospective buyers over time. (For more information about this, see my previous Sales Funnel 101 blog posts).

In a way, a sales funnel sounds like just another in a long list of popular buzzwords and fad-like marketing techniques — yet another “sales trick” that entrepreneurs can choose to use in their business or choose to ignore.

But a sales funnel is not something you can choose to use or choose to ignore. Your business has a sales funnel whether you wanted it to have one or not.

Your business has a sales funnel because every business has a sales funnel: Every business interacts with prospective buyers over time and slowly builds trust with them through every interaction. Every buyer is slowly convinced to buy because of the relationship they have with the business. That IS a sales funnel. If your business tries to sell something to someone, your business has a sales funnel.

It doesn’t matter if your business is entirely offline, entirely online, or somewhere in between. It doesn’t matter if you’re a preeminent guru in your field or just starting out on the long road of entrepreneurship. Your business has a sales funnel because you are trying to prove to a cold, uncaring audience that you are worth paying attention to so you can ultimately sell to them.

Your business has a sales funnel. That’s a fact. It’s not a question of “if”.

So what are you going to do about?

Since your business has a sales funnel, you should take control of it. Most businesses focus in on specific channels (blogs, articles, etc.) and try to succeed with marketing that works in that channel. But if you were to pull back and look at all of their marketing from a 30,000 foot view, you’d see a crazy mish-mash of thoughts and channels that are mixed up. Some point here. Some point there. Some promote one thing. Some promote something else. Individually, the entrepreneur may think they are effectively marketing. But when viewed together, you’d quickly see another story: The marketing doesn’t speak in a loud, clear voice telling the buyer to buy. It’s a cacophony of voices that potentially confuse the buyer.

Smart businesses know that all channels need to work together — like moving parts in an engine — each part doing a specific, focused job to make the engine run. Rather than allowing each channel in your marketing do its own thing, why not apply some powerful sales funnel strategy and approach your marketing with the big picture in mind.

That’s why you use a sales funnel — because your business has one so you might as well make it work for you.

A sales funnel is made up of several stages, each one representing a stage in the relationship between a buyer and a seller.

Many people have theorized about the number of stages in a sales funnel — some theorizing 2, 3, 4, 5, 6, 7, or more. I think each of these theories has something valuable to add to our consideration of sales funnels. However, in my work on sales funnels, I have tried to consistently use 5 stages, just so my readers have a reference point.

AARON HOOS’ 5-STAGE SALES FUNNEL

The 5 stages I’ve identified as being typical stages in sales funnels are:

Contacts at the Audience stage think very different things than contacts at the Customer stage. (Audience-stage contacts barely know who you are. Customer-stage contacts have trusted you enough to give you some of their money in exchange for a product or service).

At the top of your funnel are the Audience-stage contacts who barely know who you are and are just looking for basic information about a problem or need that they might or might not be aware of. The Audience is the widest part of the sales funnel.

Your job as a business owner/entrepreneur/salesperson is to take in lots of contacts in the Audience stage and move them through each stage of the sales funnel until they become Customers. Then, to continue to move them through the sales funnel to make them into Evangelists (so they’ll happily talk about your products or services with their peers).

You move them through your sales funnel with marketing activities and sales activities — and ultimately a relationship.

Not everyone will move through at the same speed, and some contacts will fall out of your sales funnel at each stage. That’s okay; it’s expected. But the ones that stay in your sales funnel, that you build a trusting relationship with, will become Customers (and ideally Evangelists). Customers and Evangelists are at the narrowest part of the sales funnel.

A sales funnel is a graphical depiction of the interaction you have with your prospective buyers over time. (For more information about this, see my previous Sales Funnel 101 blog post entitled What is a sales funnel? )

At the beginning of your relationship with your customer (the top of the funnel), lots of people will hear your attention-getting marketing messages. However, as the buyer/seller relationship deepens, fewer and fewer people continue interacting with you. Some drop out. Some delay the purchase. By the time you get to the actual sale (near the bottom of the funnel), only a fraction of your initial interested Audience hand over their money to buy what you’re selling.

HERE’S WHY THAT HAPPENS

Early in the relationship, you broadly identify a need, want, or “pain” that someone has. You attract people into the top of your sales funnel because they feel the very need, want, or pain that you have identified. However, as the relationship deepens, not everyone will buy your solution.

If you work at a car dealership, consider the need that your target market has to get from home to work. You can broadly identify that need and then work with people who need to get from home to work. But realistically, not all of those people will buy a car from you. Over time, as you build a relationship with these people, the real buyers will continue through your sales funnel toward a sale while the non-buyers will fade away (for example, some won’t be able to afford your cars, some might find a better deal elsewhere, and some might choose to take the bus).

Ultimately, the funnel is funnel-shaped because it represents the initial wider “catchment” of a broad Audience and then the filtering process as the buyer/seller relationship deepens… to the narrow point of a purchase.

As a business, you use marketing activities to capture the attention of prospective buyers and then you use sales activities to convince those prospective buyers to buy from you.

You build a relationship with this potential market and you slowly move them toward a sale.

It’s a relationship – it takes place through several interactions, over time. It’s not unlike a romantic relationship: First you capture the attention of a potential romantic partner and then you woo them until you finally agree to a committed relationship. It doesn’t happen right away (even in cases of “love at first sight”).

In the same way: Your potential buyer goes through a series of mindset changes as he or she first decides that they might have a problem or need, and then slowly comes to realize that you might be qualified to help them, and then finally agrees to consider you as a potential solution provider, and then sometimes agrees to exchange their money for your product or service.

It happens in two basic steps:

The first part of the relationship is marketing: Marketing is attention-getting, positioning work that you do online and offline to raise awareness that you can solve a problem or fulfill a need. The marketing activities you might do include writing articles and blog posts, tweeting, taking a prospective buyer out to lunch, taking out an advertisement in a local payer, and mailing out flyers… just to name a few activities.

The second part of the relationship is sales: Sales is offering a product or service to a specific potential buyer and showing them how it will solve their problem or need. It is the point in the relationship when you ask your potential buyer to take action. Sales activities you might do include a sales letter, a proposal, an agreement, and a face-to-face sales presentation… just to name a few activities.

But this isn’t the whole story. Marketing and sales are the two basic steps but rarely does a potential buyer turn into an actual buyer immediately. (Yes, it happens sometimes, but not all the time). Rather, it’s a progression. It’s a series of interactions over time in which your business increasingly becomes the solution provider.

THE SALES FUNNEL: PICTURING THIS RELATIONSHIP

Your relationship with your prospective buyer is a series of interactions over time in which you show them that you can help them. The sales funnel is a picture of this relationship.

The sales funnel depicts your marketing activities where you capture the attention of a large group of prospective buyers and then interact with them over time until some of that larger group decides to buy from you.

But it’s not JUST a picture. A sales funnel is a guide that not only describes what your typical buyer/seller relationship looks like. It’s also a system that helps you know how to work with your prospective buyers effectively and efficiently. It’s a strategic tool that can help you sell more, at less cost.

Because every business has a relationship with its prospective buyers, every business has a sales funnel. Some businesses never give a second thought to their sales funnels, or they know they have a sales funnel but only consider it to be a “nice-to-know” depiction of the buyer/seller relationship.

But smart companies know that a deep awareness of their sales funnel can help them generate more profit and achieve greater business growth. That’s because a smart business wants to take control of the relationship and help move the prospective buyer toward a purchase. This requires intention and focus and an understanding of what a prospective buyer thinks and how that mindset changes over time.

When you understand your sales funnel, your business with be stronger and more profitable because you’ll be able to design all of your marketing and sales activities to strategically move your prospect buyer through the relationship toward a sale.

Aaron Hoos is a writer, strategist, and investor who builds and optimizes profitable sales funnels.